U.S. homebuyers and refinancers staged an aggressive comeback last week, taking swift advantage of slightly lower interest rates just as Wall Street braces for the Federal Reserve’s policy decision on Wednesday.
The Mortgage Bankers Association (MBA) reported that total mortgage applications rose 11% for the week ending May 2, snapping back from the 4.2% decline seen the week before.
The jump, which ranks among the top four weekly gains in 2025 so far, signals a notable resurgence in housing market activity amid mixed economic signals.
Rates Drop, Applications Spike
The average 30-year fixed mortgage rate for conforming loan balances—$806,500 or less—eased to 6.84%, down from 6.89% a week earlier. That small dip triggered a wave of new demand, both from buyers and homeowners looking to refinance.
Purchase applications increased by 11%, while refinance activity rose by the same margin. Year-over-year, refinancing volumes are now 51% higher, a dramatic swing after months of tepid activity.
“With rates moving lower, refinance volume increased 11 percent, led by VA refinance applications, which were up 26 percent,” said Mike Fratantoni, MBA’s chief economist. He noted that conventional purchase applications, typically favored by move-up buyers with higher loan sizes, rose 13% and are now up 9% from a year ago.
Government-backed loans, such as those insured by the Federal Housing Administration (FHA), also saw rising demand. FHA purchase applications jumped 9%, contributing to an overall 6% increase in government loan demand.
Economic Clouds, All Eyes On The Fed
The mortgage data arrives just days after a slew of mixed economic indicators.
While April’s jobs report showed solid employment gains, other metrics disappointed. First-quarter GDP growth came in negative and manufacturing activity continued to show signs of contraction, according to the latest business surveys.
“The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April,” said Fratantoni.
Investors overwhelmingly expect the Fed to hold rates steady in the 4.25%-4.5% range during its upcoming policy meeting.
Chair Jerome Powell‘s press conference, scheduled for 2:30 p.m. ET on Wednesday, will be closely watched for hints on when rate cuts might begin.
Speculators currently assign just a 30% chance of a 25-basis-point rate cut by June, but odds jump to 75% for a potential easing by July, reflecting growing confidence in a summer pivot.
Market Reactions
Real estate equities have started to price in optimism. The Real Estate Select Sector SPDR Fund XLRE climbed 0.8% in premarket trading Wednesday.
Digital Realty Trust Inc. DLR, Simon Property Group Inc. SPG and Public Storage PSA each gained 1.6%, leading the charge among the broader sector.
The iShares Mortgage Real Estate ETF REZ jumped 2.3% after hours Tuesday. Pre-market Wednesday saw BRT Apartments Corp. BRT up 6.4%, Healthcare Realty Trust Inc. HR rising 2.6% and Equity LifeStyle Properties Inc. ELS adding 2.2%.
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